466 B.R. 118
Bankr. S.D. Ohio2012Background
- Debtor Denise R. Abbott, a dependent of her husband, settled a wrongful death claim with PHICO, funded by an annuity administered by MetLife.
- The annuity pays Debtor $2,000 monthly and a $200,000 lump sum due October 29, 2014; PHICO owns the annuity.
- Trustee seeks turnover of the $2,000 monthly Benefits and the October 2014 lump sum, and challenges exemption under Ohio law.
- Debtor contends the Benefits are exempt under Ohio Rev. Code § 2329.66(A)(12)(b) as payments on wrongful death and reasonably necessary for support.
- Court applies Ohio statutory exemption, considers if Benefits are reasonably necessary using the Hamo eleven-factor test, and rules on turnover and exemption.
- Court finds the Benefits exempt to the extent of $1,505.55 monthly until retirement and $56,448 lump sum, with remaining amounts subject to turnover.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Benefits qualify as exempt under OHIO REV.CODE § 2329.66(A)(12)(b). | Abbott argues Benefits are payments on wrongful death and exempt. | Trustee asserts Annuity is an investment, not a wrongful-death payment. | Benefits are exempt under § 2329.66(A)(12)(b). |
| Whether the Benefits are reasonably necessary for Debtor's support. | Abbott contends Benefits are needed for current and retirement support. | Trustee argues the Benefits function as investment; uncertain necessity. | Benefits are reasonably necessary for present and future support, in part. |
| Whether the Trustee may compel turnover of the Benefits. | Debtor lacks control over the Annuity; Benefits should remain exempt. | Trustee seeks turnover of Benefits not exempted or limited. | Turnover allowed to the extent of amounts not exempted; $494.45 monthly and $143,552 lump remain subject to turnover. |
| What is the proper characterization of the Annuity (ownership/control) for exemption purposes. | Abbott did not own or control the Annuity; it belongs to PHICO; Benefits arise from loss compensation. | Trustee treats Annuity as investment vehicle; ownership/control affect exemption. | Annuity itself not exempt; Benefits arise from wrongful death compensation and may be exempt. |
Key Cases Cited
- Andrews, 301 B.R. 211 (Bankr. N.D. Ohio 2003) (distinguishes loss-compensation annuities from investment vehicles for exemption)
- Rhinebolt, 131 B.R. 978 (Bankr. S.D. Ohio 1995) (annuity funded to settle a tort claim; exemption denied where asset resembled an account receivable)
- Hamo, 233 B.R. 718 (Bankr. BAP 1999) (eleven-factor test for determining necessity of retirement funds under exemptions)
- Eilbert, 212 B.R. 954 (8th Cir. BAP 1997) (debtor's control over annuity corpus affects exemption; lack of control weighs against exemption)